Big bank mergers have developed a reputation as grinding, impersonal events in which the individual is either sacrificed or stymied for the good of a new organization that always appears at first to be brighter, sleeker and more rewarding, but sadly doesn’t always live up to its billing.
Yet for many of us on the Chase Manhattan side of the merger in 1995, Chemical Bank represented a lifeline to a much brighter future.
I joined Chase in 1993 after four years at Citibank working for its vice chairman Bill Rhodes. The Citi culture may have been aggressive and at times brash, but at least you knew you were in a bank that was going places; always embracing the latest technologies, diving into different geographies, acting like it was the best on the block because it knew it was the best on the block.
Chase was different. It had lots of talented people, but no coherent strategy. It was a follower in a world where the lead pack was always pulling farther away. Where Citi was sharped-edged and challenging, Chase was comfortable and anything but challenging.
It did, however, have an incredible amount of residual brand equity that invoked the great name of Rockefeller. At times, you had a sense you were the financial services equivalent of the US State Department. All of which was, I suppose, comforting to reflect on, but didn’t do much for the earnings stream or the future viability of the place.
I had only been at Chase for a matter of weeks when I realized just how slow-footed it was. I was delighted to be able to see my family again after four years of long working days and a lot of international travel, but I needed to figure out a way to keep my career moving forward. So I decided that I would use my time at Chase to learn everything I could about those areas of the bank that had the most potential. And so it was that I spent time supporting people like Kathy O’Donnell and Jorge Jasson in emerging market fixed income, Tom Gallagher in the transportation investment banking group; and Fred Chapey in derivatives.
Using the bank to learn was the best way I could think of before a better opportunity came along.
Senior management did its best to convince the press, the analysts and its staff that they knew what they were doing but the sense on the trading floors and investment banking suites was that time was running out on an institution that appeared so powerful to the uninitiated, yet stood on shaky ground.
In August 1995, when the merger was announced, we on the Chase side all watched with amusement as our management billed it as a merger of equals, or a “pooling of interests” as Labrecque liked to say.
It was anything but.
There was clarity at the top from day one and that’s not a bad thing; for the staff it showed resolve; for the stock analysts it showed speed of foot and an earnestness about eschewing co-heads.
In the days and weeks that followed, more announcements reinforced the notion that, whatever we had in store, it would be delivered with swiftness and clarity.
There were casualties on the Chase side that were regrettable. My boss Steve Rautenberg, one of the best and bravest PR guys I’ve ever worked with, left, as did other numerous talented traders and bankers.
There was also an unwritten code about how to behave during the selection process. If you were fortunate enough to have befriended a Chemical employee they would share with you the following advice: “It’s OK to market yourself, but never at the expense of another. Your goal should be to simply get on the bus. Don’t worry about where you are on the bus because things will change over time.”
I was lucky. I ended up supporting Don Layton and his capital markets and investment banking teams. In 1998, Layton approved my transfer to run the communications and marketing team in London, where I worked with a talented group of people, including Herb Aspbury who ran the investment bank and Bruce Hannon who ran the rates side.
I left Chase in 2001 to run the Barclays Capital communications and marketing team. Beforehand I lived through – just barely – the deal with JPMorgan. This was an acquisition that unfortunately saw the protocols and sensibilities of the previous mergers go out the window, to be replaced by a culture clash of the highest order.
In putting this retrospective together I found myself completely changing my view of what happened 20 years ago. As an old Chase guy, I had for the longest time believed that it was the inherent weaknesses in the Chemical and ManHan franchises that brought them together. Now I realize that, while they had their problems, they also had strong core franchises and most importantly, strong management – many of whom stayed together through the entire roll-up.
There will be more consolidations for the banking industry down the road and hopefully they will be as successful as JPMorgan Chase. But to have a ringside seat for this one was a fascinating experience – one which allowed me to work closely with smart senior executives, solid bankers and savvy traders – none of whom ever entertained thoughts of lining their own pockets at the expense of the franchise they helped build.
This column’s author had an inside view of the Chemical/Chase merger 20 years ago.
Read his full account here: